WOODBRIDGE, N.J., July 24, 2019 (GLOBE NEWSWIRE) — NORTHFIELD BANCORP, INC. (NFBK), the holding company for Northfield Bank, reported diluted earnings per common share of $0.17 and $0.36 for the quarter and six months ended June 30, 2019, respectively, compared to diluted earnings per common share of $0.23 and $0.45 for the quarter and six months ended June 30, 2018, respectively, and diluted earnings per common share of $0.19 for the quarter ended March 31, 2019. Earnings for the quarter and six months ended June 30, 2018, included excess tax benefits related to the exercise or vesting of equity awards of $1.3 million, or $0.03 per diluted share, and $2.1million, or $0.05 per diluted share, respectively. There were no material excess tax benefits for the quarter or six months ended June 30, 2019, or for the quarter ended March 31, 2019.

Commenting on the quarter, Steven M. Klein, the Company’s President and Chief Executive Officer, noted, “We continue to invest in our people, technology and the promotion of our brand, to expand our locally grown approach to community business banking.   Our strategic investments have resulted in significant growth in originated loans for the quarter and the six-months ended June 30, 2019, as well as significant deposit growth in business accounts.” Mr. Klein continued, “Our successes from our strategic investments continue to be challenged by a highly competitive interest rate environment in our marketplace, primarily related to deposit gathering, and more recently in loan rates and terms.” Mr. Klein noted, “Our deployment of capital in high quality commercial loans, securities, and stock repurchases, continues to bring longer-term value to our stockholders.”

Mr. Klein further noted, “I’m pleased to announce that the Board of Directors has declared a dividend of to $0.11 per common share, payable on August 21, 2019, to stockholders of record on August 7, 2019.”

Net income was $17.0 million and $21.1 million for the six months ended June 30, 2019, and June 30, 2018, respectively. Significant variances from the comparable prior year period are as follows: an $825,000 decrease in net interest income, a $154,000 decrease in the provision for loan losses, a $1.0 million increase in non-interest income, a $3.8 million increase in non-interest expense, and a $653,000 increase in income tax expense.

Net interest income for the six months ended June 30, 2019, decreased $825,000, or 1.5%, to $54.5 million, from $55.3 million for the six months ended June 30, 2018, as a 30 basis point decrease in our net interest margin to 2.59% more than offset a $380.8 million, or 9.9%, increase in our average interest-earning assets. The decrease in net interest margin was primarily due to the increased cost of our interest-bearing liabilities, which increased 47 basis points to 1.50% for the six months ended June 30, 2019, from 1.03% for the six months ended June 30, 2018. The increase in our average interest-earning assets was primarily due to increases in average loans outstanding of $86.4 million, average mortgage-backed securities of $167.3 million, and average other securities of $127.9 million. Net interest income for the six months ended June 30, 2019 included loan prepayment income of $594,000 as compared to $1.1 million for the six months ended June 30, 2018. Yields earned on interest-earning assets increased 10 basis points to 3.79% for the six months ended June 30, 2019, from 3.69% for the six months ended June 30, 2018, driven by higher yields on loans and securities.

The provision for loan losses decreased by $154,000 to $550,000 for the six months ended June 30, 2019, compared to $704,000 for the six months ended June 30, 2018, as an improvement in historical loss rates and environmental factors offset loan growth and higher net charge-offs. Net charge-offs for the six months ended June 30, 2019, were $215,000 compared to net recoveries of $18,000 for the six months ended June 30, 2018.

Non-interest income increased $1.0 million, or 21.3%, to $5.9 million for the six months ended June 30, 2019, from $4.8 million for the six months ended June 30, 2018, primarily due to a $1.2 million increase in gains on securities transactions, net. For the six months ended June 30, 2019, securities gains, net, included gains of $1.4 million related to the Company’s trading portfolio, compared to gains of $302,000 in the comparative prior year period. The trading portfolio is utilized to fund the Company’s deferred compensation obligation to certain employees and directors of the Company’s deferred compensation plan (the “Plan”). The participants of this Plan, at their election, defer a portion of their compensation. Gains and losses on trading securities have no effect on net income since participants benefit from, and bear the full risk of, changes in the trading securities market values. Therefore, the Company records an equal and offsetting amount in compensation expense, reflecting the change in the Company’s obligations under the Plan.

Non-interest expense increased $3.8 million, or 11.1%, to $38.0 million for the six months ended June 30, 2019, compared to $34.2 million for the six months ended June 30, 2018. This is due primarily to a $2.6 million increase in employee compensation and benefits, $1.1 million of which is related to the Company’s deferred compensation plan, which is described above and has no effect on net income, with the remainder attributable to increased costs associated with new hires related to a branch opening and new lending personnel, merit increases effective January 1, 2019, and higher medical benefit costs. Additionally, there was a $356,000 increase in occupancy costs, primarily attributable to higher rent expense related to a new branch opening, an increase of $326,000 in data processing costs, and an increase of $841,000 in advertising expense attributable to the timing of advertising programs and increased expenditure focused on driving growth. These increases were partially offset by decreases of $114,000 in professional fees and $217,000 in other expense. Non-interest expense for the six months ended June 30, 2019 included approximately $1.4 million of equity award expense related to equity awards granted on June 11, 2014, which vested in equal installments over a five year period beginning one year from the date of grant and were fully vested on June 11, 2019.

The Company recorded income tax expense of $4.9 million for the six months ended June 30, 2019, compared to $4.2 million for the six months ended June 30, 2018. The effective tax rate for the six months ended June 30, 2019, was 22.4% compared to 16.8% for the six months ended June 30, 2018, the increase being primarily due to lower excess tax benefits related to the exercise or vesting of equity awards. Excess tax benefits were $286,000 and $2.1 million for the six months ended June 30, 2019, and June 30, 2018, respectively. Excess tax benefits will fluctuate throughout the year based on the Company’s stock price and timing of employee stock option exercises and vesting of other share-based awards.

On May 15, 2019 New Jersey issued a tax technical bulletin which gave guidance on which entities are to be included in a combined group. Real Estate Investment Trusts and Investment Companies will be excluded from the combined group. They will continue to file separate company New Jersey tax returns. As a result of this guidance the Company recorded an additional $211,000 of state tax expense net of federal benefit for the six months ended June 30, 2019. The $211,000 increase was comprised of $425,000 of current tax expense, partially offset by a write-up of deferred tax assets of $214,000.

Subsequent Events

In July 2019, two loans that had been previously charged-off, one in full and one partly charged-off and had cash payments for interest applied to principal, were repaid in full, resulting in an aggregate recovery of approximately $2.3 million, which will be recognized in the third quarter of 2019 through the allowance for loan losses and interest income. Additionally, the Company expects to receive bank owned life insurance proceeds in excess of the cash surrender value of the related policies of approximately $2.4 million, which will also be recognized in the third quarter of 2019.

Comparison of Operating Results for the Three Months Ended June 30, 2019 and 2018

Net income was $8.2 million and $10.6 million for the quarters ended June 30, 2019, and June 30, 2018, respectively. Significant variances from the comparable prior year quarter are as follows: a $611,000 decrease in net interest income, a $179,000 decrease in the provision for loan losses, a $1.7 million increase in non-interest expense, and a $387,000 increase in income tax expense.

Net interest income for the quarter ended June 30, 2019, decreased $611,000, or 2.2%, as a 30 basis point decrease in our net interest margin to 2.55% from 2.85% for the quarter ended June 30, 2018, more than offset a $371.5 million, or 9.5%, increase in our average interest-earning assets. The decrease in net interest margin was primarily due to the increased cost of our interest-bearing liabilities, which increased 45 basis points to 1.53% for the quarter ended June 30, 2019, from 1.08% for the quarter ended June 30, 2018. The increase in average interest-earning assets was primarily due to increases in average loans outstanding of $86.8 million, average mortgage-backed securities of $192.9 million, and average other securities of $100.6 million, partially offset by an $8.2 million decrease in average interest-earning deposits in financial institutions. Net interest income for the quarter ended June 30, 2019, included loan prepayment income of $174,000 as compared to $479,000 for the quarter ended June 30, 2018. Yields earned on interest-earning assets increased eight basis points to 3.77% for the quarter ended June 30, 2019, from 3.69% for the quarter ended June 30, 2018, driven by higher yields on loans and securities.

The provision for loan losses decreased by $179,000 to $491,000 for the quarter ended June 30, 2019, from $670,000 for the quarter ended June 30, 2018, as an improvement in historical loss rates and environmental factors offset an increase from loan growth and higher net charge-offs. Net charge-offs were $145,000 for the quarter ended June 30, 2019, compared to net recoveries of $40,000 for the quarter ended June 30, 2018.

Non-interest income was $2.6 million for the quarter ended June 30, 2019, compared to $2.4 million for the quarter ended June 30, 2018.

Non-interest expense increased $1.7 million, or 10.0%, to $18.8 million for the quarter ended June 30, 2019, from $17.0 million for the quarter ended June 30, 2018. The increase was due primarily to an increase of $716,000 in compensation and employee benefits, primarily due to increased salary expense associated with new hires related to a branch opening and new lending personnel, and merit increases effective January 1, 2019. Additionally, there were increases of $170,000 in occupancy costs, primarily attributable to higher rent expense, $287,000 in data processing costs, and $688,000 in advertising expense, due in part to the timing of advertising programs and increased expenditure focused on driving growth. Non-interest expense for the quarter ended June 30, 2019 included approximately $625,000 of equity award expense related to equity awards granted on June 11, 2014, which vested in equal installments over a five year period beginning one year from the date of grant and were fully vested on June 11, 2019.

The Company recorded income tax expense of $2.3 million for the quarter ended June 30, 2019, compared to $1.9 million for the quarter ended June 30, 2018. The effective tax rate for the quarter ended June 30, 2019, was 21.7% compared to 15.1% for the quarter ended June 30, 2018, the increase being primarily due to lower excess tax benefits related to the exercise or vesting of equity awards. Excess tax benefits were $193,000 and $1.3 million for the quarters ended June 30, 2019, and June 30, 2018, respectively.

On May 15, 2019 New Jersey issued a tax technical bulletin which gave guidance on which entities are to be included in a combined group. Real Estate Investment Trusts and Investment Companies will be excluded from the combined group. They will continue to file separate company New Jersey tax returns. As a result of this guidance the Company recorded an additional $211,000 of state tax expense net of federal benefit for the quarter ended June 30, 2019. The $211,000 increase was comprised of $425,000 of current tax expense, partially offset by a write-up of deferred tax assets of $214,000.

Comparison of Operating Results for the Three Months Ended June 30, 2019, and March 31, 2019

Net income was $8.2 million and $8.8 million for the quarters ended June 30, 2019, and March 31, 2019, respectively. Significant variances from the prior quarter are as follows: a $171,000 decrease in net interest income, a $432,000 increase in the provision for loan losses, a $748,000 decrease in non-interest income, a $454,000 decrease in non-interest expense, and a $330,000 decrease in income tax expense.

Net interest income for the quarter ended June 30, 2019, decreased $171,000, or 0.6%, as an eight basis point decrease in our net interest margin to 2.55% from 2.63% for the quarter ended March 31, 2019, more than offset a $70.0 million, or 1.7%, increase in our average interest-earning assets. The decrease in net interest margin was primarily due to an increased cost of our interest-bearing liabilities, which increased six basis points to 1.53% for the current quarter as compared to 1.47% for the prior quarter. The increase in our average interest-earning assets was due primarily to increases in average loans outstanding of $42.3 million, and average mortgage-backed securities of $87.6 million, partially offset by decreases in average other securities of $19.4 million and average interest-earning deposits in financial institutions of $43.7 million. Net interest income for the quarter ended June 30, 2019 included loan prepayment income of $174,000, as compared to $420,000 for the quarter ended March 31, 2019. Yields earned on interest-earning assets decreased three basis points to 3.77% for the quarter ended June 30, 2019, from 3.80% for the quarter ended March 31, 2019.

The provision for loan losses increased by $432,000 to $491,000 for the quarter ended June 30, 2019, from $59,000 for the quarter ended March 31, 2019, primarily due to loan growth. Net charge-offs were $145,000 for the quarter ended June 30, 2019, compared to net charge-offs of $70,000 for the quarter ended March 31, 2019.

Non-interest income decreased $748,000 to $2.6 million for the quarter ended June 30, 2019, from $3.3 million for the quarter ended March 31, 2019. This decrease was primarily due to an $839,000 decrease in gains on securities transactions, net. Securities gains, net, during the quarter ended June 30, 2019, included gains of $343,000 related to the Company’s trading portfolio, compared to gains of $1.1 million in the quarter ended March 31, 2019. As discussed above, the trading portfolio is utilized to fund the Company’s deferred compensation plan and gains and losses on trading securities have no effect on net income since participants benefit from, and bear the full risk of, changes in the trading securities market values.

Non-interest expense decreased $454,000, or 2.4%, to $18.8 million for the quarter ended June 30, 2019, from $19.2 million for the quarter ended March 31, 2019, primarily due to a $1.2 million decrease in employee compensation and benefits, $739,000 of which is related to the Company’s deferred compensation plan which is described above and has no effect on net income, with the remainder attributable to a decrease in medical benefit costs. Partially offsetting the decrease, were increases of $567,000 in advertising expense and $174,000 in data processing costs.

The Company recorded income tax expense of $2.3 million for the quarter ended June 30, 2019, compared to $2.6 million for the quarter ended March 31, 2019. The effective tax rate for the quarter ended June 30, 2019 was 21.7% compared to 22.9% for the quarter ended March 31, 2019.

Financial Condition

Total assets increased $359.9 million, or 8.2%, to $4.77 billion at June 30, 2019, from $4.41 billion at December 31, 2018. The increase was primarily due to increases in available-for sale debt securities of $241.6 million, or 29.9%, loans held-for-investment, net, of $93.6 million, or 2.9%, Federal Home Loan Bank of New York stock of $9.8 million, or 43.6%, and the recording of our operating leased assets of $42.4 million from the adoption of Accounting Standards Update (ASU) No. 2016-02 Leases (Topic 842) on January 1, 2019, which requires us to recognize on the balance sheet right-of-use assets, which approximate the present value of our remaining lease payments. Partially offsetting these increases was a decrease in cash and cash equivalents of $30.9 million, or 39.7%.

As of June 30, 2019, we estimate that our non-owner occupied commercial real estate concentration (as defined by regulatory guidance issued in 2006) to total risk-based capital was approximately 443%. Management believes that Northfield Bank (the Bank) has implemented appropriate risk management practices including risk assessments, board approved underwriting policies and related procedures which include monitoring bank portfolio performance, performing market analysis (economic and real estate), and stressing of the Bank’s commercial real estate portfolio under severe adverse economic conditions. Although management believes the Bank has implemented appropriate policies and procedures to manage our commercial real estate concentration risk, the Bank’s regulators could require us to implement additional policies and procedures or could require us to maintain higher levels of regulatory capital, which might adversely affect our loan originations, ability to pay dividends, and profitability.

Cash and cash equivalents decreased by $30.9 million, or 39.7%, to $46.9 million at June 30, 2019, from $77.8 million at December 31, 2018. Balances fluctuate based on the timing of receipt of security and loan repayments and the redeployment of cash into higher-yielding assets such as loans and securities, or the funding of deposit outflows or borrowing maturities.

Loans held-for-investment, net, increased $93.6 million to $3.34 billion at June 30, 2019, from $3.25 billion at December 31, 2018, primarily due to an increase in originated loans held-for-investment of $121.9 million, partially offset by decreases in acquired loans of $26.3 million and purchased credit-impaired (“PCI”) loans of $2.1 million. Originated loans held-for-investment, net, totaled $2.80 billion at June 30, 2019, as compared to $2.68 billion at December 31, 2018. The increase was primarily due to an increase in multifamily real estate loans of $98.7 million, or 5.1%, to $2.03 billion at June 30, 2019, from $1.93 billion at December 31, 2018.

On June 12, 2019, New York City announced revised rent laws that included: repealing provisions that remove units from rent stabilization when rent crosses a high threshold or when a unit becomes vacant; or if the tenant’s income is $200,000 or higher in the preceding two years. The updated laws also eliminate a “vacancy bonus” provision which allows property owners to raise rents as much as 20% each time a unit becomes vacant. At June 30, 2019, the Company has approximately $398.2 million in multifamily loans in New York City with tenants that have some form of rent stabilization or rent control. The weighted average loan to value (“LTV”) was 45.8% based on the current balance and the collateral value at date of origination on this portfolio. The highest LTV in this portfolio is 70.2%. All of the loans are performing as agreed. Management will continue to evaluate the effect of rent regulations on the collateral values.

The following tables detail our multifamily real estate originations for the six months ended June 30, 2019 and 2018 (dollars in thousands):

For the Six Months Ended June 30, 2019
Multifamily
Originations
  Weighted Average
Interest Rate
  Weighted Average
Loan-to-Value Ratio
  Weighted Average Months to Next
Rate Change or Maturity for Fixed
Rate Loans
  (F)ixed or
(V)ariable
  Amortization Term
$ 161,117     4.27%     56%     74   V   10 to 30 Years
28,838     4.43%     60%     267   F   15 to 30 Years
$ 189,955     4.29%     57%              
                             
For the Six Months Ended June 30, 2018
Multifamily
Originations
  Weighted Average
Interest Rate
  Weighted Average
Loan-to-Value Ratio
  Weighted Average Months to Next
Rate Change or Maturity for Fixed
Rate Loans
  (F)ixed or
(V)ariable
  Amortization Term
$ 159,649     3.77%     69%     77   V   25 to 30 Years
6,615     4.07%     38%     180   F   15 Years
$ 166,264     3.78%     68%              
                             

Acquired loans decreased by $26.3 million to $519.9 million at June 30, 2019, from $546.2 million at December 31, 2018, primarily due to paydowns of one-to-four family residential and multifamily loans with weighted average interest rates (net of the servicing fee retained by the originating bank) of 3.63% and 2.85%, respectively, partially offset by purchases of one-to-four family residential loan pools totaling $40.9 million.

The following table provides the details of the loan pools purchased during the six months ended June 30, 2019 (dollars in thousands):

Purchase
Amount
  Loan Type   Weighted
Average Interest
Rate(1)
  Weighted Average
Loan-to-Value
Ratio
  Weighted Average Months to
Next Rate Change or
Maturity for Fixed Rate
Loans
  (F)ixed or
(V)ariable
  Original
Amortization
Term
$ 4,237     Residential   4.19%     70.5%     324   F   15 – 30 Years
17,253     Residential   3.69%     63.0%     78   V   30 Years
$ 19,448     Residential   4.19%     71.3%     333   F   30 Years
$ 40,938         3.98%                  
                               

(1) Net of servicing fee retained by the originating bank

The geographic locations of the properties collateralizing the loans purchased in the table above are as follows: 89.6% in Massachusetts, 7.0% in New York, and 3.3% in New Jersey.

PCI loans totaled $18.1 million at June 30, 2019, as compared to $20.1 million at December 31, 2018. The majority of the PCI loan balance consists of loans acquired as part of a Federal Deposit Insurance Corporation-assisted transaction. The Company accreted interest income of $1.0 million and $2.1 million attributable to PCI loans for the three and six months ended June 30, 2019, respectively, as compared to $1.0 million and $2.1 million for the three and six months ended June 30, 2018, respectively.

The Company’s available-for-sale debt securities portfolio increased by $241.6 million, or 29.9%, to $1.05 billion at June 30, 2019, from $808.0 million at December 31, 2018. The increase was primarily attributable to purchases of mortgage-backed and corporate securities, partially offset by paydowns and sales. At June 30, 2019, $844.8 million of the portfolio consisted of residential mortgage-backed securities issued or guaranteed by Fannie Mae, Freddie Mac, or Ginnie Mae. In addition, the Company held $204.5 million in corporate bonds, the majority of which were considered investment grade at June 30, 2019, and $273,000 in municipal bonds.

Total liabilities increased $345.2 million, or 9.2%, to $4.09 billion at June 30, 2019, from $3.74 billion at December 31, 2018. The increase was primarily attributable to an increase in deposits of $13.7 million, securities sold under agreements to repurchase of $75.0 million, other borrowings of $211.2 million, and lease liabilities of $46.3 million, attributable to capitalization of our operating leases as a result of adoption of ASU No. 2016-02, effective January 1, 2019.

Deposits increased $13.7 million, or 0.4%, to $3.30 billion at June 30, 2019, as compared to $3.29 billion at December 31, 2018. The increase was attributable to increases of $19.9 million in transaction accounts and $125.8 million in savings accounts, partially offset by decreases of $39.5 million in money market accounts, and $92.6 million in certificates of deposit. Deposit account balances are summarized as follows (dollars in thousands):

  June 30, 2019   March 31, 2019   December 31, 2018
Transaction:          
Non-interest bearing checking $ 386,784     $ 380,681     $ 395,375  
Negotiable orders of withdrawal 486,529     529,610     458,012  
Total transaction 873,313     910,291     853,387  
Savings and Money market:          
Savings 720,130     678,712     594,290  
Money market 702,405     721,810     741,939  
Total savings 1,422,535     1,400,522     1,336,229  
Certificates of deposit:          
Brokered deposits 237,908     242,061     275,398  
$250,000 and under 647,958     697,575     696,957  
Over $250,000 118,477     124,756     124,541  
Total certificates of deposit 1,004,343     1,064,392     1,096,896  
Total deposits $ 3,300,191     $ 3,375,205     $ 3,286,512  
                       

Included in the table above are business and municipal deposit account balances as follows (dollars in thousands):

  June 30, 2019   March 31, 2019   December 31, 2018
           
Business customers $ 506,727     $ 474,866     $ 468,166  
Municipal customers $ 322,369     $ 399,979     $ 337,053  

Borrowings and securities sold under agreements to repurchase increased to $695.1 million at June 30, 2019, from $408.9 million at December 31, 2018. Management utilizes borrowings to mitigate interest rate risk, for short-term liquidity, and to a lesser extent as part of leverage strategies.  Management increased borrowings because it was more cost effective than the incremental cost of deposits.

The following is a table of term borrowing maturities (excluding capitalized leases and overnight borrowings) and the weighted average rate by year at June 30, 2019 (dollars in thousands):

Year   Amount   Weighted Average Rate
2019   $110,000   1.66%
2020   90,000   1.65%
2021   145,000   1.94%
2022   95,000   2.33%
2023   87,500   2.89%
Thereafter   62,500   2.57%
    $590,000   2.11%
         

Total stockholders’ equity increased by $14.7 million to $681.1 million at June 30, 2019, from $666.4 million at December 31, 2018. The increase was primarily attributable to net income of $17.0 million for the six months ended June 30, 2019, a $13.3 million increase in accumulated other comprehensive income associated with unrealized gains on our debt securities available-for-sale portfolio, and a $4.4 million increase in ESOP and equity award activity. The increase was partially offset by $9.9 million in dividend payments and $10.1 million in stock repurchases.

Asset Quality

The following table details total originated and acquired (excluding PCI) non-accrual loans, non-performing loans, non-performing assets, troubled debt restructurings on which interest is accruing, and accruing loans 30 to 89 days delinquent at June 30, 2019, March 31, 2019, and December 31, 2018 (dollars in thousands):

  June 30, 2019   March 31, 2019   December 31, 2018
Non-accrual loans:          
Held-for-investment          
Real estate loans:          
Commercial $ 9,234     $ 6,708     $ 7,291  
One-to-four family residential 1,026     1,059     1,129  
Multifamily 447     456     566  
Home equity and lines of credit 150     150     151  
Commercial and industrial     55     25  
Total non-accrual loans 10,857     8,428     9,162  
Loans delinquent 90 days or more and still accruing:          
Held-for-investment          
Real estate loans:          
One-to-four family residential 6     33     33  
Home equity and lines of credit 20          
Total loans delinquent 90 days or more and still accruing 26     33     33  
Total non-performing assets $ 10,883     $ 8,461     $ 9,195  
Non-performing loans to total loans 0.33 %   0.26 %   0.28 %
Non-performing assets to total assets 0.23 %   0.19 %   0.21 %
Loans subject to restructuring agreements and still accruing $ 14,508     $ 16,243     $ 16,390  
Accruing loans 30 to 89 days delinquent $ 4,291     $ 8,652     $ 8,562  

The increase in non-accrual loans during the quarter was primarily attributable to two commercial real estate loans totaling approximately $2.6 million (originated $1.3 million and acquired $1.3 million) being placed on non-accrual status during the quarter ended June 30, 2019. The loans have been individually evaluated for impairment and are adequately secured by collateral with an aggregate fair value of approximately $3.4 million.

Accruing Loans 30 to 89 Days Delinquent

Loans 30 to 89 days delinquent and on accrual status totaled $4.3 million, $8.7 million, and $8.6 million at June 30, 2019, March 31, 2019, and December 31, 2018, respectively. The following table sets forth delinquencies for accruing loans by type and by amount at June 30, 2019 and December 31, 2018 (dollars in thousands):

  June 30, 2019   March 31, 2019   December 31, 2018
Held-for-investment          
Real estate loans:          
Commercial $ 2,237     $ 4,272     $ 2,377  
One-to-four family residential 1,799     3,843     4,120  
Multifamily         2,018  
Construction and land     25      
Home equity and lines of credit     362      
Commercial and industrial loans 248     142     45  
Other loans 7     8     2  
Total delinquent accruing loans held-for-investment $ 4,291     $ 8,652     $ 8,562  
                       

PCI Loans (Held-for-Investment)

At June 30, 2019, 6.1% of PCI loans were past due 30 to 89 days, and 22.3% were past due 90 days or more, as compared to 10.0% and 23.3%, respectively, at December 31, 2018.

About Northfield Bank

Northfield Bank, founded in 1887, operates 40 full-service banking offices in Staten Island and Brooklyn, New York, and Hunterdon, Middlesex, Mercer, and Union counties, New Jersey. For more information about Northfield Bank, please visit www.eNorthfield.com.

Forward-Looking Statements: This release may contain certain “forward looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, and may be identified by the use of such words as “may,” “believe,” “expect,” “anticipate,” “should,” “plan,” “estimate,” “predict,” “continue,” and “potential” or the negative of these terms or other comparable terminology.  Examples of forward-looking statements include, but are not limited to, estimates with respect to the financial condition, results of operations and business of Northfield Bancorp, Inc.  Any or all of the forward-looking statements in this release and in any other public statements made by Northfield Bancorp, Inc. may turn out to be wrong.  They can be affected by inaccurate assumptions Northfield Bancorp, Inc. might make or by known or unknown risks and uncertainties as described in our SEC filings, including, but not limited to, those related to general economic conditions, particularly in the market areas in which the Company operates, competition among depository and other financial institutions, changes in laws or government regulations or policies affecting financial institutions, including changes in regulatory fees and capital requirements, inflation and changes in the interest rate environment that reduce our margins or reduce the fair value of financial instruments, our ability to successfully integrate acquired entities, if any, and adverse changes in the securities markets.  Consequently, no forward-looking statement can be guaranteed.  Northfield Bancorp, Inc. does not intend to update any of the forward-looking statements after the date of this release, or conform these statements to actual events.

(Tables follow)

NORTHFIELD BANCORP, INC.
SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA
(Dollars in thousands, except per share amounts) (unaudited)

  At or For the Three Months Ended   At or For the Six Months Ended
  June 30,   March 31,   June 30,
  2019   2018   2019   2019   2018
Selected Financial Ratios:                  
Performance Ratios(1)                  
Return on assets (ratio of net income to average total assets) (7) 0.72%   1.03%   0.79%   0.75%   1.04%
Return on equity (ratio of net income to average equity) (7) 4.84   6.58   5.29   5.06   6.59
Average equity to average total assets 14.86   15.61   14.97   14.91   15.70
Interest rate spread 2.24   2.61   2.33   2.29   2.66
Net interest margin 2.55   2.85   2.63   2.59   2.89
Efficiency ratio(2) 63.08   56.40   62.67   62.87   56.79
Non-interest expense to average total assets 1.64   1.65   1.73   1.69   1.68
Non-interest expense to average total interest-earning assets 1.76   1.75   1.85   1.80   1.78
Average interest-earning assets to average interest-bearing liabilities 125.20   128.83   125.54   125.37   128.69
Asset Quality Ratios:                  
Non-performing assets to total assets 0.23   0.17   0.19   0.23   0.17
Non-performing loans(3) to total loans(4) 0.33   0.20   0.26   0.33   0.20
Allowance for loan losses to non-performing loans held-for-investment 255.74   421.48   324.85   255.74   421.48
Allowance for loan losses to originated loans held-for-investment, net(5) 0.95   1.02   0.97   0.95   1.02
Allowance for loan losses to total loans held-for-investment, net(6) 0.83   0.83   0.84   0.83   0.83

(1)   Annualized when appropriate.
(2)   The efficiency ratio represents non-interest expense divided by the sum of net interest income and non-interest income.
(3)   Non-performing loans consist of non-accruing loans and loans 90 days or more past due and still accruing (excluding PCI loans), and are included in total loans held-for-investment, net.
(4)   Includes originated loans held-for-investment, PCI loans, and acquired loans.
(5)   Excludes PCI loans and acquired loans held-for-investment, and related reserve balances.
(6)   Includes PCI and acquired loans held-for-investment.
(7)  The three months ended June 30, 2019, March 31, 2019, and June 30, 2018, include excess tax benefits of $193,000,  $93,000, and $1.3 million, respectively, related to the exercise or vesting of equity awards. The six months ended June 30, 2019 and June 30, 2018, include excess tax benefits of $286,000 and $2.1 million, respectively, related to the exercise or vesting of equity awards. Excess tax benefits will fluctuate based on the Company’s stock price and timing of employee stock option exercises and vesting of other share-based awards.

NORTHFIELD BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share and per share amounts) (unaudited)

  June 30, 2019   March 31, 2019   December 31, 2018
ASSETS:          
Cash and due from banks $ 14,156     $ 14,166     $ 15,147  
Interest-bearing deposits in other financial institutions 32,751     71,659     62,615  
Total cash and cash equivalents 46,907     85,825     77,762  
Trading securities 10,214     9,759     8,968  
Debt securities available-for-sale, at estimated fair value 1,049,660     894,272     808,031  
Debt securities held-to-maturity, at amortized cost 8,872     9,448     9,505  
Equity securities 2,328     1,465     1,280  
Originated loans held-for-investment, net 2,800,816     2,727,852     2,678,877  
Loans acquired 519,885     509,116     546,150  
Purchased credit-impaired (PCI) loans held-for-investment 18,077     18,892     20,143  
Loans held-for-investment, net 3,338,778     3,255,860     3,245,170  
Allowance for loan losses (27,832 )   (27,486 )   (27,497 )
Net loans held-for-investment 3,310,946     3,228,374     3,217,673  
Accrued interest receivable 14,116     13,205     12,959  
Bank owned life insurance 155,939     155,031     154,135  
Federal Home Loan Bank of New York stock, at cost 32,330     22,517     22,517  
Operating lease right-of-use assets 42,377     43,500      
Premises and equipment, net 25,700     25,211     25,605  
Goodwill 38,411     38,411     38,411  
Other assets 30,482     28,429     31,586  
Total assets $ 4,768,282     $ 4,555,447     $ 4,408,432  
           
LIABILITIES AND STOCKHOLDERS’ EQUITY:          
Deposits $ 3,300,191     $ 3,375,205     $ 3,286,512  
Securities sold under agreements to repurchase 75,000          
Federal Home Loan Bank advances and other borrowings 620,105     409,244     408,891  
Lease liabilities 46,321     47,414      
Advance payments by borrowers for taxes and insurance 20,817     20,723     18,007  
Accrued expenses and other liabilities 24,755     23,421     28,583  
Total liabilities 4,087,189     3,876,007     3,741,993  
Total stockholders’ equity 681,093     679,440     666,439  
Total liabilities and stockholders’ equity $ 4,768,282     $ 4,555,447     $ 4,408,432  
           
Total shares outstanding 49,112,139     49,773,796     49,635,673  
Tangible book value per share (1) $ 13.07     $ 12.86     $ 12.63  

(1)   Tangible book value per share is calculated based on total stockholders’ equity, excluding intangible assets (goodwill and core deposit intangibles), divided by total shares outstanding as of the balance sheet date. Core deposit intangibles were $899,000, $966,000, and $1.0 million at June 30, 2019, March 31, 2019, and December 31, 2018, respectively, and are included in other assets.

NORTHFIELD BANCORP, INC.
CONSOLIDATED STATEMENT OF INCOME
(Dollars in thousands, except share and per share amounts) (unaudited)

  Three Months Ended   Six Months Ended
  June 30,   March 31,   June 30,
  2019   2018   2019   2019   2018
Interest income:                  
Loans $ 33,308     $ 31,456     $ 32,590     $ 65,898     $ 62,243  
Mortgage-backed securities 4,599     3,068     4,074     8,673     5,794  
Other securities 1,699     821     1,865     3,564     1,323  
Federal Home Loan Bank of New York dividends 340     398     402     742     812  
Deposits in other financial institutions 247     192     535     782     445  
Total interest income 40,193     35,935     39,466     79,659     70,617  
Interest expense:                  
Deposits 10,549     6,050     10,247     20,796     11,261  
Borrowings 2,485     2,115     1,889     4,374     4,042  
Total interest expense 13,034     8,165     12,136     25,170     15,303  
Net interest income 27,159     27,770     27,330     54,489     55,314  
Provision for loan losses 491     670     59     550     704  
Net interest income after provision for loan losses 26,668     27,100     27,271     53,939     54,610  
Non-interest income:                  
Fees and service charges for customer services 1,207     1,147     1,140     2,347     2,361  
Income on bank owned life insurance 907     914     896     1,803     1,868  
Gains on available-for-sale debt securities, net 59     116     155     214     171  
Gains on trading securities, net 343     197     1,086     1,429     302  
Other 50     71     37     87     147  
Total non-interest income 2,566     2,445     3,314     5,880     4,849  
Non-interest expense:                  
Compensation and employee benefits 9,837     9,121     11,020     20,857     18,238  
Occupancy 3,120     2,950     3,282     6,402     6,046  
Furniture and equipment 265     252     259     524     508  
Data processing 1,437     1,150     1,263     2,700     2,374  
Professional fees 811     909     747     1,558     1,672  
Advertising 1,331     643     764     2,095     1,254  
FDIC insurance 255     274     277     532     571  
Other 1,694     1,741     1,592     3,286     3,503  
Total non-interest expense 18,750     17,040     19,204     37,954     34,166  
Income before income tax expense 10,484     12,505     11,381     21,865     25,293  
Income tax expense 2,280     1,893     2,610     4,890     4,237  
Net income $ 8,204     $ 10,612     $ 8,771     $ 16,975     $ 21,056  
Net income per common share:                  
Basic $ 0.18     $ 0.23     $ 0.19     $ 0.36     $ 0.46  
Diluted $ 0.17     $ 0.23     $ 0.19     $ 0.36     $ 0.45  
Basic average shares outstanding 46,855,647     46,184,918     46,940,903     46,897,546     45,983,895  
Diluted average shares outstanding 47,271,690     47,109,977     47,288,160     47,279,196     47,056,299  
                             

NORTHFIELD BANCORP, INC.
ANALYSIS OF NET INTEREST INCOME
(Dollars in thousands) (unaudited)

  For the Three Months Ended
  June 30, 2019   March 31, 2019   June 30, 2018
  Average
Outstanding
Balance
  Interest   Average
Yield/
Rate (1)
  Average
Outstanding
Balance
  Interest   Average
Yield/
Rate (1)
  Average
Outstanding
Balance
  Interest   Average
Yield/
Rate (1)
Interest-earning assets:                                  
Loans (2) $ 3,260,550     $ 33,308     4.10 %   $ 3,218,277     $ 32,590     4.11 %   $ 3,173,787     $ 31,456     3.98 %
Mortgage-backed securities (3) 714,930     4,599     2.58     627,377     4,074     2.63     522,009     3,068     2.36  
Other securities (3) 227,379     1,699     3.00     246,802     1,865     3.06     126,823     821     2.60  
Federal Home Loan Bank of New York stock 24,966     340     5.46     21,729     402     7.50     25,487     398     6.26  
Interest-earning deposits in financial institutions 48,885     247     2.03     92,538     535     2.34     57,061     192     1.35  
Total interest-earning assets 4,276,710     40,193     3.77     4,206,723     39,466     3.80     3,905,167     35,935     3.69  
Non-interest-earning assets 298,223               286,313               238,225            
Total assets $ 4,574,933               $ 4,493,036               $ 4,143,392            
                                         
Interest-bearing liabilities:                                        
Savings, NOW, and money market accounts $ 1,918,810     $ 5,377     1.12 %   $ 1,857,654     $ 4,794     1.05 %   $ 1,655,819     $ 2,312     0.56 %
Certificates of deposit 1,010,045     5,172     2.05     1,101,865     5,453     2.01     900,437     3,738     1.67  
Total interest-bearing deposits 2,928,855     10,549     1.44     2,959,519     10,247     1.40     2,556,256     6,050     0.95  
Borrowed funds 487,115     2,485     2.05     391,365     1,889     1.96     475,067     2,115     1.79  
Total interest-bearing liabilities 3,415,970     13,034     1.53     3,350,884     12,136     1.47     3,031,323     8,165     1.08  
Non-interest bearing deposits 385,820               379,642               414,792            
Accrued expenses and other liabilities 93,176               90,012               50,589            
Total liabilities 3,894,966               3,820,538               3,496,704            
Stockholders’ equity 679,967               672,498               646,688            
Total liabilities and stockholders’ equity $ 4,574,933               $ 4,493,036               $ 4,143,392            
                                         
Net interest income     $ 27,159               $ 27,330               $ 27,770        
Net interest rate spread (4)         2.24 %           2.33 %           2.61 %
Net interest-earning assets (5) $ 860,740               $ 855,839               $ 873,844            
Net interest margin (6)         2.55 %           2.63 %           2.85 %
Average interest-earning assets to interest-bearing liabilities         125.20 %           125.54 %           128.83 %

(1)   Average yields and rates are annualized.
(2)   Includes non-accruing loans.
(3)   Securities available-for-sale and other securities are reported at amortized cost.
(4)   Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.
(5)   Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
(6)   Net interest margin represents net interest income divided by average total interest-earning assets.

  For the Six Months Ended
  June 30, 2019   June 30, 2018
  Average
Outstanding
Balance
  Interest   Average
Yield/
Rate (1)
  Average
Outstanding
Balance
  Interest   Average
Yield/
Rate (1)
Interest-earning assets:                      
Loans (2) $ 3,239,530     $ 65,898     4.10 %   $ 3,153,089     $ 62,243     3.98 %
Mortgage-backed securities (3) 671,395     8,673     2.60     504,126     5,794     2.32  
Other securities (3) 237,037     3,564     3.03     109,144     1,323     2.44  
Federal Home Loan Bank of New York stock 23,357     742     6.41     25,155     812     6.51  
Interest-earning deposits in financial institutions 70,591     782     2.23     69,631     445     1.29  
Total interest-earning assets 4,241,910     79,659     3.79     3,861,145     70,617     3.69  
Non-interest-earning assets 292,301               240,627            
Total assets $ 4,534,211               $ 4,101,772            
                           
Interest-bearing liabilities:                          
Savings, NOW, and money market accounts $ 1,888,401     $ 10,171     1.09 %   $ 1,669,009     $ 4,455     0.54 %
Certificates of deposit 1,055,701     10,625     2.03     861,366     6,806     1.59  
Total interest-bearing deposits 2,944,102     20,796     1.42     2,530,375     11,261     0.90  
Borrowed funds 439,505     4,374     2.01     469,937     4,042     1.73  
Total interest-bearing liabilities 3,383,607     25,170     1.50     3,000,312     15,303     1.03  
Non-interest bearing deposits 382,748               409,918            
Accrued expenses and other liabilities 91,603               47,615            
Total liabilities 3,857,958               3,457,845            
Stockholders’ equity 676,253               643,927            
Total liabilities and stockholders’ equity $ 4,534,211               $ 4,101,772            
                           
Net interest income     $ 54,489               $ 55,314        
Net interest rate spread (4)         2.29 %           2.66 %
Net interest-earning assets (5) $ 858,303               $ 860,833            
Net interest margin (6)         2.59 %           2.89 %
Average interest-earning assets to interest-bearing liabilities         125.37 %           128.69 %

(1)   Average yields and rates are annualized.
(2)   Includes non-accruing loans.
(3)   Securities available-for-sale and other securities are reported at amortized cost.
(4)   Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.
(5)   Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
(6)   Net interest margin represents net interest income divided by average total interest-earning assets.

Company Contact:
William R. Jacobs
Chief Financial Officer
Tel: (732) 499-7200 ext. 2519

 



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